Interpersonal Affect, Accountability and Experience in Auditor Fraud Risk Judgments and the Processing of Fraud Cues
Jennifer K. Schafer and Brad A. Schafer
Coles Working Paper Series, SPRING17-04, March 2017
Auditors must contend with an array of management personalities during the course of an audit engagement. Some clients by their nature are more likeable, while others may create a stressful or unpleasant environment for the engagement. This paper examines whether management likeability that is unrelated to fraud risk influences an auditors’ fraud likelihood judgments for the manager’s company. The paper also examines whether accountability and experience, which have been shown to improve auditor judgments in other settings, reduces the consideration of manager likeability as a factor in fraud judgments. Results indicate that more likeable (dislikeable) clients cause auditors to judge the likelihood of fraud to be lower (higher). Accountability (informing auditors they will be required to explain their judgment) moderates this effect, but only for experienced auditors. Results also indicate that client likeability influences inexperienced auditors’ fraud assessments by biasing specific evidence cues that refer to management. That is, a manager’s statements related to his or her pressures or attitudes are rated as more (less) indicative of fraud when made by a dislikeable (likeable) manager. These findings suggest that education and training can be improved to better differentiate relevant and irrelevant cues in fraud judgments, particularly for less experienced auditors. Overview
22 | Coles Working Paper
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